South Africa’s defeat in the Cricket World Cup – Relevance to Corporates

Last evening, South Africa (well accepted as the best team in the cricket world cup and the most consistent team in the last several years) suffered a defeat at the hands of New Zealand, in the quarter-finals and are now out of contention. This is the fifth time South Africa has lost a knock-out match in the world-cup (infact, they have never won a knock-out match in the world cup so far).

How often do we find that in companies, the employees who should be getting the promotions, the best ratings, end up not getting those because of various rules/factors that come up during the performance appraisal process – e.g. freeze on promotions, restrictions on number of promotions.

While it is acceptable in sport tournaments that teams need to perform on those critical matches to win, shouldn’t we adopt a better process/approach to measure and evaluate people in companies. In companies, we want people who deliver results consistently, yet our performance management processes reward people who deliver the more visible results and can manipulate the process better, especially around the performance appraisal process timelines.

One way to do a better job is to use Recognition data in performance management. Let’s say an individual gets recognized repeatedly throughout the year for delivering results and exhibiting behaviour, that the company wants. If this data is linked to the performance appraisal process, it will be easier for the manager to identify the individuals who truly deserve the best ratings. It will also give an opportunity for HR to analyze the recognition data and performance data and assess if the performance management processes and the recognition philosophies are aligned.

Warren Buffett's Management Style

I watched the interviews of Warren Buffett http://profit.ndtv.com/video/show/194418 and Ajit Jain (President of Berkshire Hathway's Reinsurance business and the one tipped to be Warren Buffett's successor) http://profit.ndtv.com/video/show/194467 on NDTV Profit last night.

There was something Ajit mentioned about Warren's management style that really caught my attention - He mentioned that "Warren does an incredible job of decoupling the decision making before the outcome occurs and the actual outcome of the decision, while evaluating and measuring his people. So this makes it easy and very clear to work with Warren. He went on to elucidate by saying that the way the world typically works, you may have made a good decision, but end up with a bad outcome and the world comes down hard upon you. On the flip side, you may have made a bad decision and end up with a good outcome and praises are showered upon you".

This ability to do this differentiation repeatedly could well be one of the big reasons why Berkshire is so successful.

Warren Buffett in India

The Indian media has been buzzing this week with Warren Buffett's first visit to India. Buffett stated that "he is bit of a retard to come to India so late".

Though the general expectation is that Buffett is here to scout for investment opportunities in India (Berkshire Hathway's only investment in India is currently a small Bangalore based cutting tools company "Taegutec" - http://www.taegutec-india.com/), Buffett is actually here on his philantrophic drive "The Giving Pledge", to ask wealthy Indians to pledge money for social causes. He will be joined in this mission by Bill Gates - Wow - the world's second and third richest men in India - and for what - "Sharing their story on why they are giving and asking others to do the same".

My colleague S Max Brown (http://rideau.com/blogs/s-max-brown), in all his keynotes on Real Leadership, talks about being "Other Focused" as one of the principal traits of a good leader - What an example in Warren Buffett and Bill Gates! A few rich Indians have started to follow this path already (to some extent as their contributions are still a portion of their net wealth), the most significant ones being:

1) The Azim Premji Foundation (a grant of Rs. 8000 Cr ~ USD 1800 million by Azim Premji - Wipro's founder and Chairman) - to tackle the problem of basic education by creating a sustainable support system for improving the quality of the teachers at the grassroot level.

2) The GMR Varalaskhmi Foundation - This first generation entrepreneur, Grandhi Mallikarjuna Rao, has pretty much given all his wealth (INR 1540 Cr ~ USD 340 million) to this foundation that intends to focus on education and vocational training for the underpriveleged.

3) Reliance (Mukesh Ambani - the world's 9th richest man) has created a foundation (INR 500 Cr ~ USD 110 million) to provide affordable healthcare and rural development.

I am not including the great work the Tatas have been doing over the last 70-80 years in India. I believe that they are one corporate that truly practises sustainable development and inclusive growth - just visit any of the towns where the Tatas have invested and you can see that the quality of life for everyone in that town is a couple of levels above other towns in that area - e.g. Jamshedpur.

Starting to use Recognition

“I have managed people for over 5 years now, but have never really done any kind of recognition for my people (outside of a few nominations for corporate wide award programs). I have now realized the value of recognition and want to really start using Recognition very effectively with my team. If I suddenly start now, won’t my people wonder what is wrong and feel suspicious”

This is probably one of the best questions someone has asked me about using recognition.

I first asked him why he wants to do recognition suddenly now? He told me that when he first became a manager, he felt that he had achieved something in his career and he felt he was superior than the folks he managed. Essentially he felt that he became a manager because he could do the job better than others and now his job was to teach the people on the team how to do their jobs. With time, he has realized that his job is really to just support his people and make available the resources they need, to perform their jobs, rather than telling them what to do. For this, he has realized that he needs to build trust with his people and drive up their engagement levels. He believes Recognition is a key component of doing this.

My response to him was quite simple – “At first, your people will wonder what your agenda is behind doing all this recognition suddenly now. They will be very skeptical and cautious and will probably not receive your first few instances of recognition very well. The best way to counter this would be to not stop doing it. If the Recognition is sincere and they see you doing it for a few months, they will start understanding that you are genuinely making an effort to appreciate them. The key here is to have a reasonable recognition plan (say for about 12 months), obtain the budget for it, communicate to the team and stick to the plan without worrying about the results”.

Recognition in the Restaurant Business in India

Whenever I visit McDonald’s, Pizza Hut, Taco Bell or Dominos in India, one thing I notice consistently is the enthusiasm and smile on the faces of the folks who work there – the counter staff, the waiters, the delivery boys etc. At the same time, when I go to other restaurants the staff is keen to service you as a customer, but I can’t see the spark on their faces – When I look at them they seem to be telling me “I am doing this job, because I need the money and I can’t find anything else better”.

While at McDonald’s, I get a different feeling – the employees seem proud to be working there – they seem to enjoy being there – they seem to belong there. Surprisingly the pay at McDonalds versus the other restaurants is almost the same – Infact, the local ones seem to be paying their staff a little better as that seems to be the only way they can get people to work for them.

While being a global brand, a large company etc. may help, I believe that the big companies have figured out that they need to have happy people as their frontline staff – since their brand is too dependent on them.

Not surprisingly, all these companies seem to take recognition quite seriously. Taco Bell had a poster with the words “Recognize, Recognize, Recognize”. McDonald’s has a large poster titled “Employee of the Month” with space for photographs of 12 employees to be placed on them for each month. These are located in the store in a place that a customer can take a look at, if he/she is interested. When I spoke to some of the employees, they told me that they keep getting rewarded and recognized for a number of things – for cross selling products that are more profitable for them – e.g. Fries and Coke with a burger; for staying an extra hour, for chipping in with a extra day of work in place of a co-worker etc. Above all they told me that what they liked was the fact that they were really busy throughout their work shift – which means business is good. They trusted that if business is good, their management will take care of them with bonuses, salary raises, benefits, growth etc.

Is it a coincidence that McDonald’s is the largest restaurant company in the world ($25 billion in revenues) or have they have really figured out what is it that matters for their business? Their people – especially their frontline staff. By building trust, by appreciating them consistently & sincerely and by empowering them to make decisions on the fly for the benefit of the customer, they have created a business that is exceptionally successful and profitable.

IT'S LONELY AT THE TOP

Over the weekend, I was at a cousin’s wedding in Chennai. This was a typical two session south Indian wedding (Reception in the evening, with the main wedding the next day morning), with a focus on the rituals and of course, an overdose of some great south Indian food.

During the reception, I noticed someone who looked like the CEO of one of India’s top 5 IT services companies (over $4 billion in revenues). I asked a few people sitting around me if my guess was right. After some “Ifs” and “Buts”, everyone seemed to agree that he was indeed the CEO of this large company. Quick checks with some people in the know at the wedding confirmed that he was a cousin of the groom’s mother.

We then noticed a lot of people whispering about this person. But to my surprise, no one really bothered to approach him and talk to him. This person was sitting quietly with 3-4 other elderly gentlemen. Well, the CEO then went on to have dinner and left quietly. Everyone was commenting on how simple the guy was despite being a very powerful corporate CEO with a personal net worth of probably over INR 2000 Crores (approx. USD 0.5 billion).

We land up at the wedding the next day morning and well, the CEO was there. Again, sitting quietly next to the same 3-4 elderly gentlemen. After spending about 3 hours watching the wedding, the person had lunch and left.

In all, this person had spent around 6 hours at the wedding – though he occasionally looked at his phone and typed some messages, he seemed quite free and spent his time watching the wedding and enjoying the food.

Two things really surprised me about this whole episode:
1) Probably over 50% of the wedding attendees recognized who this person was, but no one could muster enough courage to say hello to him (though a number of them, including me, really wanted to). Infact, there were 2 guests who were employees in that company and even they couldn’t muster enough courage to say hello to their CEO in such an informal non-threatening family setting.
2) Another thing that surprised me was that even relatives were not approaching him (other than a few folks here and there saying a quick hello) and he didn’t seem to be really having a conversation with anyone at a wedding with over 800 guests. If the family was close enough to him, for him to spend over 6 hours of his weekend in a city that is not where he lives (so add about 8-10 hours for the travel), I would have expected him to be an important member of the family. So this lack of socializing really puzzled me.

As I drove back to Bangalore, I thought about the whole episode and it struck me that here was a person, who a lot of people wanted to speak with, take pictures with, but were just not able to muster the will to actually do it.

Looking at it from this individual’s perspective, why was he not connecting or even making an attempt to connect with others at the wedding? To be fair to him, given his exceptionally busy work life as a CEO, he probably wanted to simply unwind at the wedding and not interact with others – but as the dialogue in the movie Spiderman goes, “With Great Power comes Great Responsibility”. I don’t believe that people in very powerful roles can afford/desire to unwind in a public setting. People in such powerful roles need to make an extra effort to connect with people, otherwise they may end up in a lonely place with a lot of sycophants around them. Because of how successful they are, they must know that everyone wants to connect with them, but are unable to do so or feel awkward doing so. So the onus is on the individual to make it easier for people to connect with them. If employees who work for him (in a services company that is pretty much about people), are unable to come up to him and say “hello” during a non-threatening, family event, is the leader really connecting with his people or simply going through the motions? I am sure the company spends considerable effort and money in conducting employee surveys to identify areas that matter to the employees – For this leader, an informal chat with a few of his employees present at the wedding, who are now part of his extended family, would have given so much more insight than any employee survey or an employee focus group could ever provide.

I believe that for companies to remain unassailable and to continue being a great company, their leaders absolutely need to connect with all their stakeholders in the true sense – customers, investors and their employees, and it is the leaders who need to make the bigger effort to connect with them at every possible opportunity to ensure that they are grounded and make decisions that truly matter to the stakeholders.